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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London open: Markets suffer as US crisis drags on The FTSE opened around 15 points lower this morning, tracking steep losses seen in US, as the political brinkmanship over the debt ceiling continued into its second week.
Miners, a typically volatile and cyclical sector, were seen taking the brunt of the decline, with retailers - particularly M&S and Next - also suffering strong falls.
"The government shutdown has now entered its second week and still, a deal on the budget and the debt ceiling are no closer to being done. The longer this goes on, the more we're going to see this uncertainty in the markets turn into negativity," said Market Analyst Craig Erlam from Alpari.
ITV provided a ray of light, after Exane BNP reportedly raised its target on the stock.
In marco news, the RICS house price balance continued to rise in September, to the 54.0 point mark from 41.0 in the month before. The consensus estimate had been for just a slight increase, to 42.0.
Similarly, the price expectations balance increased to its highest since May 2002, but there was a decline in the new buyer enquiries, suggesting a small loss of momentum in activity.
Meanwhile, the government has launched a mortgage guarantee scheme in a bid to aid those wanting to purchase their own home, and giving banks the opportunity to offer high loan-to-value mortgages. The second phase of the 'Help to Buy' scheme comes into effect this week, some three months earlier than originally planned.
National Grid has warned that this winter will see the highest risk of electricity blackouts in six years - made worse by the plunging output from the nation's 5,000 wind turbines.
Looking across the Channel, investors will turn to the release of data in the Eurozone including the German trade balance and German factory orders.
The German reports will be released amid uncertainty over which party Chancellor Angela Merkel's Christian Democrats will form a coalition with in order to end a hung parliament.
Opposition party Social Democrats have signalled their readiness to join the conservative Christian Democrats while a top aide for Merkel has suggested a partnership with the Greens was a realistic possibility.
FTSE 250: Ferrexpo delivers record production result
Ferrexpo, the Swiss head-quartered iron ore company, has produced a record amount of 65% iron pellets from its own ore this year so far, the group said Tuesday. Total pellet production was up 12.5% in the year-to-date, with production for September coming to 970.4kt.
Insurer Direct Line has agreed to sell its life insurance arm to closed book specialist Chesnara and return the profit to shareholders. The pair have agreed a £62m fee for Direct Line Life Insurance, which parent Direct Line said it expected to result in a £12m gain.
Materials group Victrex said sales volumes picked up in the second half of the year, after good progress across its industrial and transport markets, adding that its order book for October is reassuring. Full-year sales volumes were slightly ahead of last year at 2,920 tonnes from 2,904 tonnes in 2012, following a robust second half performance, with sales volume approximately 10% ahead of the first half year.
Civil engineer Atkins has won a £75m deal to design three of the six lines of the new Riyadh Metro in Saudi Arabia. Atkins will lead a design joint venture with Spanish consultancy Typsa for the FAST consortium, comprising FCC, Samsung, Alstom, Strukton and Freyssinet, which is responsible for metro lines 4, 5 and 6, representing just over a third of the total track. |
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| | FTSE 100 - Risers
ITV (ITV) 185.00p +1.76%
Sports Direct International (SPD) 682.50p +1.19%
ARM Holdings (ARM) 980.00p +1.03%
Aviva (AV.) 426.40p +0.90%
CRH (CRH) 1,502.00p +0.87%
Experian (EXPN) 1,163.00p +0.61%
Tate & Lyle (TATE) 745.00p +0.61%
Capita (CPI) 1,009.00p +0.60%
BAE Systems (BA.) 452.70p +0.60%
Melrose Industries (MRO) 298.30p +0.57%
FTSE 100 - Fallers
Marks & Spencer Group (MKS) 464.30p -3.33%
BHP Billiton (BLT) 1,771.50p -1.69%
Glencore Xstrata (GLEN) 326.10p -1.61%
Rio Tinto (RIO) 2,960.00p -1.33%
Next (NXT) 4,964.00p -1.31%
Tullow Oil (TLW) 992.50p -0.95%
Vedanta Resources (VED) 1,052.00p -0.85%
Lloyds Banking Group (LLOY) 73.71p -0.83%
Kingfisher (KGF) 365.00p -0.82%
Amec (AMEC) 1,068.00p -0.74%
FTSE 250 - Risers
Telecom Plus (TEP) 1,309.00p +5.56%
Ocado Group (OCDO) 452.00p +5.43%
Victrex (VCT) 1,601.00p +2.37%
Fidessa Group (FDSA) 1,944.00p +1.89%
Computacenter (CCC) 532.00p +1.82%
Howden Joinery Group (HWDN) 296.50p +1.79%
Spirent Communications (SPT) 128.30p +1.42%
Atkins (WS) (ATK) 1,124.00p +1.26%
AL Noor Hospitals Group (ANH) 834.00p +1.09%
Menzies(John) (MNZS) 797.00p +1.08%
FTSE 250 - Fallers
Ferrexpo (FXPO) 172.00p -3.10%
Dixons Retail (DXNS) 45.23p -2.69%
Home Retail Group (HOME) 167.00p -2.57%
COLT Group SA (COLT) 117.00p -2.50%
Wetherspoon (J.D.) (JDW) 711.00p -2.27%
Debenhams (DEB) 101.20p -2.13%
Afren (AFR) 136.30p -1.59%
Kazakhmys (KAZ) 249.10p -1.50%
Polymetal International (POLY) 601.50p -1.47%
Alent (ALNT) 330.00p -1.35% |
| | UK Event Calendar | | Tuesday October 08
QUARTERLY EX-DIVIDEND DATE
Verizon Communications
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (GER) (07:00)
Balance of Trade (US) (13:30)
Current Account (GER) (07:00)
Factory Orders (GER) (11:00)
Retail Price Index (GER) (07:00)
FINALS
Ibex Global Solutions
IMSS
Robert Walters
AGMS
F&C US Smaller Companies, Standard Life UK Smaller Companies Trust
TRADING ANNOUNCEMENTS
Victrex
UK ECONOMIC ANNOUNCEMENTS
BRC Sales Monitor (00:01)
RICS Housing Market Survey (09:30)
FINAL DIVIDEND PAYMENT DATE
Advanced Computer Software Group
|
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe open: US debt ceiling continues to weigh on markets - US government deadlock continues
- German data released amid hung parliament
- Credit Suisse ups Continental European stocks to 12 per cent overweight
FTSE 100: -0.23%
DAX: 0.05%
CAC 40: -0.03%
FTSE MIB: 0.22%
IBEX 35: 0.04%
Stoxx 600: -0.05%
US debt ceiling fears continued to put a damper on markets with European equities little changed and at a four-week low on Tuesday morning.
The US government has until October 17th before it reaches its $16.7bn borrowing limit.
The Treasury has said it will exhaust measures to avoid hitting the debt ceiling, otherwise it will run out of cash to pay its bills at some point between October 22nd and October 31st.
President Barack Obama on Monday stood his ground, saying that he will not negotiate with Republicans over policy conditions tied to the budget including his healthcare bill 'Obamacare' and to raise the borrowing limit.
Majority Leader Harry Reid yesterday called for the Senate to consider a "clean" increase of the debt ceiling.
"The longer this goes on, the more we're going to see this uncertainty in the markets turn into negativity," said Craig Erlam, Market Analyst at Alpari.
"The closer we get to the October 17th deadline, the more investors will begin to question whether the US will actually do the right thing in the end. I still believe that no one in their right mind would allow the US to hit the debt ceiling, causing havoc in financial markets and risking sending a number of countries, including the US itself, back into recession.
"A deal will surely be done in the end, which delays the debt ceiling being hit until the end of the year in exchange for some cuts to spending, although Obamacare will likely be spared."
The government is in its second week of a shutdown after leaders failed to agree on a budget bill by last Monday's deadline.
The deadlock has stalled the release of economic reports in the world's biggest economy.
Instead, investors will turn to the release of data in the Eurozone including the German trade balance and German factory orders.
The German reports will be released amid uncertainty over which party Chancellor Angela Merkel's Christian Democrats will form a coalition with in order to end a hung parliament.
Opposition party Social Democrats have signalled their readiness to join the conservative Christian Democrats while a top aide for Merkel has suggested a partnership with the Greens was a realistic possibility.
Telecom Italia, Alcatel-Lucent
Telecom Italia declined after S&P said it was likely to reduce its BBB-long-term rating, the lowest investment grade, to BB+ after concluding a review of the phone company by the end of next month.
Alcatel-Lucent gained following reports the company plans to cut 10,000 jobs.
TGS Nopec Geophysical dropped after saying sales for the full year will be between $810m and $870m, down from a previous forecast for a range between $920m and $1bn.
UK house builders Barratt Developments and Taylor Wimpey advanced after the house-price gauge from the Royal Institution of Chartered Surveyors rose in September to 54, the highest since June 2002, from 41 in August.
As well, Panmure Gordon has upped its view on the latter to hold from sell.
Strategists at Credit Suisse have upped the weighting of Continental European stocks in their model portfolio to 12% overweight from 7% before.
Other asset classes mixed
The euro fell 0.09% to the 1.3569 US dollar.
Brent crude futures increased $0.046 to $109.730. |
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| | US Market Report | | US close: S&P 500 at four-week low as political stalemate continues - Both sides continue to wrangle over budget, debt
- 'Clock is ticking', says China
- Moody's says shutdown won't affect credit rating
Dow Jones: -0.91%
Nasdaq: -0.98%
S&P 500: -0.85%
Wall Street benchmarks finished with steep losses on Monday as the political brinkmanship over the debt ceiling continued into its second week.
The S&P 500 specifically dropped 14.38 points (-0.9%) to 1,676.12, its worst level in four weeks.
"The government shutdown has now entered its second week and still, a deal on the budget and the debt ceiling are no closer to being done. The longer this goes on, the more we're going to see this uncertainty in the markets turn into negativity," said Market Analyst Craig Erlam from Alpari.
Lawmakers failed to reach an agreement on either the budget or the debt ceiling over the weekend in Washington, heightening fears that the US could run out of the money it needs to pay its debts later this month. House Speaker John Boehner rejected the proposal to raise the debt limit without setting pre-conditions as Republicans continue to demand a delay to the Affordable Care Act.
The Treasury has already said that it will exhaust measures to avoid going over the borrowing limit by October 17th, while the Congressional Budget Office claims that cash reserves will run dry between October 22nd and October 31st.
With both sides determined not to give up ground over President Barack Obama's flagship health-care bill, investors are concerned the debate will go down to the wire.
Even the Chinese Government has launched its first message to America about its concerns over the budget impasse. In a meeting with reporters, Vice Minister of Finance Zhu Guangyao said that "the clock is ticking" in Washington. "The US is clearly aware of China's concerns about the financial stalemate and China's request for the US to ensure the safety of Chinese investments," he said.
With very little data being released as government agencies continue to be shut down, analysts expect an increase in uncertainty and volatility on financial markets. For example , the VIX index - a measure of gauging volatility of S&P 500 index options - has already jumped 15% to 19 points, near its high of the past 52 weeks (23 points).
Analysts at Bank of America Merrill Lynch said over the weekend: "Investors know that 'debt default' would likely cause a large volatility shock (as in 2011). But we believe investors also expect any rise in volatility to be quickly countered by a risk-positive Fed/Treasury policy response.".
Ratings agency Moody's said that neither the shutdown nor the debt ceiling would affect the creditworthiness of the States: "The shutdown has no effect on the government's ability to pay interest and principal on its debt obligations, and therefore does not directly affect the government's creditworthiness," the agency said in a report.
Apple, BlackBerry lead the upside
Tech giant Apple was making gains on Monday after analysts from Jefferies upgraded the stock from 'hold' to 'buy' over a strong outlook for the coming months.
BlackBerry, the struggling smartphone maker up for sale, was also higher on reports that it is negotiating to disposal of several divisions to Cisco Systems, Google and SAP.
Banking stocks were out of favour today with Bank of America, Citigroup, JPMorgan and Goldman Sachs trading in the red.
Markets will start looking ahead to third-quarter earnings season which kicks off on Tuesday in the traditional fashion with aluminium maker Alcoa reporting. Other blue chips including JPMorgan and Wells Fargo will also report this week.
S&P 500 - Risers
Intuitive Surgical Inc. (ISRG) $380.99 +4.59%
HCP Inc. (HCP) $39.86 +2.07%
Northrop Grumman Corp. (NOC) $94.98 +1.78%
Newmont Mining Corp. (NEM) $27.17 +1.38%
Raytheon Co. (RTN) $75.22 +1.31%
Simon Property Group Inc. (SPG) $151.06 +1.27%
Kraft Foods Group, Inc. (KRFT) $53.85 +1.18%
Applied Materials Inc. (AMAT) $17.77 +1.17%
Windstream Holdings Inc (WIN) $8.11 +1.12%
Apple Inc. (AAPL) $487.75 +0.98%
S&P 500 - Fallers
Urban Outfitters Inc. (URBN) $35.66 -3.52%
Mattel Inc. (MAT) $41.15 -3.29%
Abercrombie & Fitch Co. (ANF) $33.95 -3.28%
TripAdvisor Inc. (TRIP) $75.85 -3.26%
Regeneron Pharmaceuticals Inc. (REGN) $298.95 -3.13%
Gannett Co. Inc. (GCI) $25.34 -3.06%
Best Buy Co. Inc. (BBY) $37.01 -2.99%
Eastman Chemical Co. (EMN) $77.75 -2.82%
Amazon.Com Inc. (AMZN) $310.03 -2.82%
Hudson City Bancorp Inc. (HCBK) $8.99 -2.81%
Dow Jones I.A - Risers
AT&T Inc. (T) $34.00 +0.74%
Verizon Communications Inc. (VZ) $47.29 +0.40%
Alcoa Inc. (AA) $7.97 +0.13%
Intel Corp. (INTC) $22.83 +0.09%
Dow Jones I.A - Fallers
American Express Co. (AXP) $72.94 -1.84%
Microsoft Corp. (MSFT) $33.30 -1.71%
Bank of America Corp. (BAC) $13.81 -1.71%
JP Morgan Chase & Co. (JPM) $51.83 -1.59%
Hewlett-Packard Co. (HPQ) $20.93 -1.55%
Pfizer Inc. (PFE) $28.62 -1.31%
Wal-Mart Stores Inc. (WMT) $71.87 -1.28%
International Business Machines Corp. (IBM) $182.01 -1.14%
Unitedhealth Group Inc. (UNH) $72.17 -1.12%
Walt Disney Co. (DIS) $64.59 -1.09%
Nasdaq 100 - Risers
Intuitive Surgical Inc. (ISRG) $380.99 +4.59%
Randgold Resources Ltd. Ads (GOLD) $71.22 +2.15%
Kraft Foods Group, Inc. (KRFT) $53.85 +1.18%
Applied Materials Inc. (AMAT) $17.77 +1.17%
Tesla Motors Inc (TSLA) $183.07 +1.15%
Apple Inc. (AAPL) $487.75 +0.98%
Sba Communications Corp. (SBAC) $78.05 +0.70%
F5 Networks Inc. (FFIV) $92.02 +0.52%
Liberty Media Corporation - Class A (LMCA) $147.72 +0.35%
Sears Holdings Corp. (SHLD) $64.28 +0.28%
Nasdaq 100 - Fallers
Mattel Inc. (MAT) $41.15 -3.29%
Regeneron Pharmaceuticals Inc. (REGN) $298.95 -3.13%
Amazon.Com Inc. (AMZN) $310.03 -2.82%
Netflix Inc. (NFLX) $318.16 -2.78%
Amgen Inc. (AMGN) $110.22 -2.38%
Vertex Pharmaceuticals Inc. (VRTX) $75.48 -2.24%
Activision Blizzard Inc. (ATVI) $16.51 -2.19%
Celgene Corp. (CELG) $153.87 -2.16%
Yahoo! Inc. (YHOO) $34.14 -2.15%
Gilead Sciences Inc. (GILD) $61.77 -2.01% |
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| | Newspaper Round Up | | Tuesday newspaper roundup: Economic recovery, Royal Mail, National Grid A sharp pick-up in sales, orders and hiring intentions across Britain has added to the growing weight of evidence that an economic recovery is rapidly taking hold. The barometers for activity in both services and manufacturing are pointing far fairer than three months ago, according to the latest snapshot from the British Chambers of Commerce (BCC). Adding to the sense of recovery, companies are hiring temporary workers at their fastest rate in 15 years, according to a separate study by the Recruitment and Employment Confederation and KPMG, writes The Times.
Australian business confidence jumped to a three-and-a-half year high in September, a sign that the resource-rich economy may be poised for a lasting post-election bounce. The confidence gauge measured by the National Australia Bank business survey, released on Tuesday, rose 12 points last month, to hit its highest level since March 2010, the Financial Times reported.
Retail demand for Royal Mail shares is the highest the City has seen since lastminute.com more than a decade ago, experts have said. IG Index said private investor excitement in the government sell-off has created a frenzy in the "grey market" ahead of the final deadline for share applications tonight. Private investors were betting that Royal Mail's share price will start trading at £4.03 - more that 70p higher than the government's top guide price. David Jones, Chief Strategist at IG Index, said: "The last time we saw a grey market as popular as this in the UK was lastminute.com in 2000. It's nearly as popular as Facebook 18 months ago," The Daily Telegraph says.
Housebuilder Cala, which recently changed hands in a £214m deal, today unveiled record profits and said it is seeking to double in size in the next four years. Pre-tax profit soared by 37% to £12.5m on the back of a recovery in the housing market. The Edinburgh-based firm said an increase in margins helped to overcome a 5% dip in turnover to £240.8m. It is now targeting growth in a number of property hotspots including Aberdeen, Edinburgh and Greater London, where demand for its top-end homes continues to be strong, The Scotsman says.
After centuries at the heart of the UK economy, the City of London has always found a way to bounce back. The mood of the rest of the country is fragile, with each set of inflation or factory output figures causing relief or furrowed brows among economists. Britain is five years on from the 2007 crash, and it is still not clear whether the nation is at the beginning of the end or whether it will suffer a lost decade of stagnation like Japan, The Daily Mail says.
The risk of electricity blackouts will be at the highest level for six years this winter and even greater in subsequent years because of lack of investment in new power plants, according to National Grid. The safety margin of the UK's power supply system has fallen in the past two years from 17% above the level needed to cope in an "average cold spell" to 5%. National Grid admitted that a prolonged period of low wind, common in cold spells, would push the margin even lower as output plummeted from the nation's 5,000 wind turbines, The Times reports. | | |
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